COUNTRY IN FOCUS
battery and energy storage sector. “Tanzania is endowed
with highly sought-after high purity, large flake graphite
deposits. There is also a move to explore and develop
rare earth elements, lithium and nickel sulphide deposits.
The combination of these have the potential to make
Tanzania a major supplier in the new energy economy,”
says Steenkamp.
In addition, the gold sector is expected to benefit
from the current global uncertainty in which investors
consider the yellow metal to be a safe haven during
the current economic downturn and trade wars. “Gold
mining companies are investing in continued exploration,
new projects and listing on the Dar es Salaam Stock
Exchange, suggesting confidence in the Tanzanian gold
mining sector. The Tanzanian government
will, however, have to address the
increasing illegal and artisanal
mining issue, that is currently
resulting in millions of
shillings being lost
to the country,” says
Steenkamp. The
traditional energy
sector is also still
alive and well in
Tanzania, with
coal-to-power
projects actively
being developed.
The country
will potentially
benefit from the
new equipment and
technologies being
imported into the country
on the back of these
projects.
scale miners across Tanzania and more than USD1.54-billion
in gold was exported in 2018.
A challenging environment
Smith says companies need to be vigilant when entering
the Tanzanian market. “We’ve dealt with several litigation
issues about trapped cash. Before entering the country,
take proper advice, get established with a bank and ensure
procedures are followed in order to avoid these incidents,”
Smith advises.
Furthermore, companies need to choose their bank wisely.
Following the 2017 debacle, many banks were on the verge
of collapse due to high levels of non-performing loans.
Smith also warns prospective investors to look carefully
into workers’ permits. “This is another area where
companies are caught out as there are usually
several departments that need to approve
foreign workers’ permits,” says Smith.
“The hub’s
development at Geita is
in line with Magufuli’s latest
directive to ensure that Tanzania
takes a lead in the international
gold business.
Meanwhile, Tanzania has launched
the first ever international minerals trading
hub in the gold rich Geita District in the northwest of the
country. According to Jacky Chan, CEO of Amani Gold, a
mining company operating in the area, the trading hub
will accommodate buyers, miners, government offices,
banks and dealers at a one-stop centre. The Geita District
produces 40% of all gold produced in Tanzania. Artisanal
and local miners produce about 20 tonnes of gold per
annum in Tanzania and it is estimated that more than
90% of this gold is sold illegally. Chan says the mineral
trading hubs will allow miners to access formal and
government regulated markets. This move follows similar
establishments made by governments in Botswana and
South Africa.
The Geita District minerals trading hub is expected
to attract both local and foreign gold dealers and is
designed to be a model for other regional precious metals
trading hubs in an effort by the government to crack
down on illegal gold and precious metals trading.
The hub’s development at Geita is in line with Magufuli’s
latest directive to ensure that Tanzania takes a lead in
the international gold business. The international gold
bullion market is expected to boost the earnings of the
small-scale miners generated from gold mining activities
as well as maximise government revenues. According
to records from the Federation of Miners Association of
Tanzania (FEMATA), there are more than six million small
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Although the process to apply for a
mining license is easier now, there
are still time constraints that can
be costly if a company decides to
operate in Tanzania. Infrastructure
in terms of accessible roads, water,
health facilities and electricity
remain a challenge in most
remote areas.
Regulations and mining legislation
are very clear, and like with any other
mining jurisdictions, companies need
to be aware of them and make sure that
they follow the rules and comply. Working
with Tanzanian experts can help to smooth
the process and ensure compliance. Other
challenges include limited skills and corruption in
government departments.
Magufuli may not be business-friendly, but at least he’s
consistent. In the short-term his economics will hurt those
who historically depended on the goodwill of a corrupt
system. In the long-term, however, the Magufuli way is
bound to reap rewards. Tanzania offers huge opportunities
which are often overlooked as a result of negative
perceptions.
On the ground, the political and economic situation is a
lot different from that portrayed in the media. Magufuli is
popular amongst his people, and the business fraternity
not implicated in corrupt dealings, is positive about the
impacts of his reforms. Those that are not, have already left
Tanzania; are in the process of doing so, or are fighting legal
battles to stay out of prison.
The economy has taken a hit as a result, but the cleansing
process has flushed out the fly-by-nights and those not
committed to building a prosperous Tanzania. Dar es
Salaam is a vibrant and fast-growing city, and, with the help
of Chinese contractors, Tanzania’s infrastructure is getting
a facelift. A new railroad system will soon connect the
cities of Dodoma and Dar es Salaam, and the Julius Nyerere
International Airport boasts a new, world-class terminal.
Mining is a long-term play, and in Tanzania, for at least the
next six years, the Magufuli way is the only way.
African Mining
African Mining January 2020
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